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The American's Creed

I believe in the United States of America as a government of the people, by the people, for the people; whose just powers are derived from the consent of the governed; a democracy in a republic; a sovereign nation of many sovereign states; a perfect union, one and inseparable; established upon those principles of freedom, equality, justice, and humanity for which American patriots sacrificed their lives and fortunes.

I therefore believe it is my duty to my country to love it; to support its constitution; to obey its laws; to respect its flag; and to defend it against all enemies.

As a blogger, I get lots of article submissions and press releases sent to me on a daily basis. Normally, I ignore them but I thought this one was worth sharing. I received this last week before the Super Bowl but am just now getting around to posting it.

The IRS Knows What Happens in Vegas…

A Tax Tip from the Experts at J.K. Lasser

Thinking of placing a bet on your favorite Super Bowl contender? Keep in mind, the Internal Revenue Code is unkind to winners — and it doesn’t much like losers, either. If you win you must report your winnings. You can offset the tax bite by claiming your gambling losses, but that isn’t as easy as it sounds.

How do they know what you’ve won?

The casinos tell the IRS and sometimes withhold up to 28%.

Rules for Tax Reports and Withholdings on Winnings

Slot machines and bingo: Payouts of $1,200 or more are reported to the IRS, but there is no withholding taken out.

Keno: Similar to slot machines, but the amount won must be at least $1,500.

State lotteries and sweepstakes: Withholding is taken out of all winnings of more than $5,000.

Parimutuel pools, including horse and dog races: Subject to withholding, but only if the winnings are both more than $5,000 and at least 300 times as large as the amount bet.

If winnings are to be split, as with a lottery pool, winners are reported on a Form 5754.

Pooling money to buy lottery tickets is common among employees and friends. But whether there are two or 200 in the pool, there is going to be only one winning ticket, and somebody has to turn it in. If you are that someone, make sure you fill out a Form 5754. If your share of a $5 million prize is $1 million, you do not want to be stuck with paying income tax on the entire $5 million.

Is there anything a winning player can do to lower the bite of the income tax? And what about those who gamble and lose? The law does allow players to take gambling losses off their taxes, but only up to the amounts of their winnings.

You may deduct gambling losses only if you itemize deductions.

Claim your gambling losses as a miscellaneous deduction on Form 1040, Schedule A.

The amount of losses you deduct may not be more than the amount of gambling income you have reported on your return.

It is important to keep an accurate diary or similar record of your gambling winnings and losses.

To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

[…] The IRS Knows What Happens in Vegas – Not everything that happens in Vegas stays in Vegas. If you win a reasonable amount of money, the IRS will probably know about it. And if you want to minimize some of your winnings by adding up all of your losses, you better have some good documentation. […]